Performance appraisal of cooperative banks in Punjab

Abstract

Cooperative credit institutions are an important constituent of Indian financial system in general and banking sector in particular. Punjab is predominantly an agrarian state and cooperative banks occupy a vital position in the economy of Punjab state. So considering the importance of cooperative banks in Punjab the present research work has been undertaken to study the growth and regulatory framework of cooperative banks in India, to examine the operational performance, profitability and productivity performance of the cooperative banks in Punjab and to study the beneficiaries and employees opinion regarding the performance of cooperative banks in Punjab. The cooperative banks in India are regulated by the Reserve Bank of India through the Banking Regulation Act 1949 as applicable to cooperatives. The cooperative banks were given a special role in the Five Year Plans for the economic development of rural areas in India. As far as the operational performance of the banks is concerned the banks were successful in deposit mobilization, credit deployment and in recovering the dues but at the same time the number of branches and human resources were declining. Profitability and productivity analysis of cooperative banks reveals that total profits of the cooperative banks were decreasing due to losses in some cooperative banks and to improve the profits the banks should control their non interest expenses and efforts should be made to increase non interest incomes. Productivity analysis reveals that some of the cooperative banks were inefficient as these banks were not using their inputs efficiently. To improve productivity banks should make efforts to increase their output with the same inputs. newlineThe results shows that majority of the respondents are satisfied with the functioning of the cooperative banks except on certain issues like rate of interest charged, security provided for the loan, and training by the banks for the use of the loan amount.